By Benjamin Smith

Image courtesy of Engadget

I don’t care whether you are a retailer or a brand marketer, I just know that at some point on Friday November 19, 2010 you wished you had the same idea that some genius(es) at TJ Maxx did.

Imagine you’re sitting in a conference room in the bowels of your corporate office back in June 2010, trying to figure out what your Black Friday strategy and offers are going to be. At a retailer like TJ Maxx, in the past that could have included the sweet deal on a pair of PJ’s or a cashmere glove / scarf set. Settle down, I know the thought is intoxicating.  Mind you, the previous year TJ Maxx didn’t think too much of going bonkers for Black Friday, as you can see the played down Black Friday 2009 on their own facebook page. That person probably got fired.

So the pressure is on the new guy/gal.  What are you going to promote – the same old, or something better.  You’ve got your agency making a proposal for how to spend your dollars.  Do I smell a 2 week media flight of 30 second ads, and they said something about “activating” people via social media?  Well you can probably rest assured you won’t have to worry about any trampling incidents at your store on Black Friday if that is the case.

HOW TO BUILD AN ATOMIC BLACK FRIDAY PROMO:

Shut the conference room door, dim the lights, and make sure the skittish managers aren’t within earshot.  Now that it is safe, let’s talk about the most sacred of cows, offering a discount on something that is never on sale, expensive, possibly overpriced, yet on everybody’s shopping list. No, I’m not talking about discounting printer ink (you get fired for that).

How about the holy grail of pricing, even by Apple standards: The hot, irresistible IPAD?  What if you carved $1 Million dollars from whatever drek you were going to run to advertise the same boring me-too Black Friday offers, and poured that into a true retail exclusive, an IPAD for only $399, savings of $100 off. The largest savings on the hottest item of the last 2 years. The math is pretty simple:

MARKETING BUDGET:
Take the $1 Million you were going to dedicate to Black Friday advertising / PR / promotions and plow that into offering subsidizing the IPADS.  By the way, this could easily be scaled.  I used $1 Million to make it easy and relatively painless for any brand playing in big box retail.

SUBSIDIZED PRICING:
If you just quietly started acquiring the $499 model IPADS from various authorized resellers, there’d be no discount + an average of 8% sales tax. High end, you’re looking at paying $540. Of course, if you are able to find somebody willing & able to move volume, without alienating Apple or them knowing about it, then you might get a break. Let’s say you get 5% discount, but still have to pay sales tax. Low end you’re in for $513. Split the difference and it is approx. $525/unit. You’ve got to hit a magic price point + high optic of savings, so $100 off it is, to hit $399.
NET SUBSIDY = $125/unit.

NUMBER OF STORES:
You have 900 Stores. Run it in 50% of them. You don’t have to put it in every store – most markets will have more than 1 store, and people are willing to hunt for treasure like this.
Net = 450 stores.

NET IMPACT:
8,000 IPADS ($1M / $125/unit subsidy)
17 IPADS per store (8000 units / 450 stores)

That is a honest to goodness Black Friday promo if I’ve ever seen one, and I don’t care if it is sold out before Black Friday.  Read the fine print in your Best Buy insert this Thursday while you are waiting for your turkey. For some hot products you are lucky to get 10 per store. So 17 per store isn’t out of the question.  And for the nerds who might read this, yes I do know it was supposedly in some Marshalls stores too (owned by same parent company).  Just spread the same units over a larger number of stores, or increase the budget.  Regardless, this is a viable but different promo.

HOW TO MAKE IT GO NUCLEAR:

Well, you gave everybody something to talk about.  You must have been in a cave if you are involved in retail and didn’t hear about this today.

And to push things over the edge, you poked the King. Steve Jobs responded, or at least it sounds like he did. Which got even more people talking.  It doesn’t matter who they got them from, or how they got them, but even commenting on the issue lets you know that this is a big deal.

And whether or not you agree with the adage, there is no such thing as bad press / pr, in this case, you can definitely guarantee TJ Maxx will be on more people’s minds come this Black Friday & Holiday Season than before.  And inside of TJ Maxx, somebody’s career will forever be referenced as Before IPAD, and After IPAD.

FROM THE HORSE’S MOUTH (posted on TJ Maxx’s website):

We have received many inquiries about a particular item recently sold in our stores. A small number of T.J.Maxx and Marshalls stores received a very limited quantity of electronic tablets this week. These were first quality goods sourced from a retailer. They sold out in one day, and they were not advertised in the media.

This speaks to the excitement of our business model to deliver ‘wows’ this season and always. You never know what unexpected deals, designers or hot items you will find as part of the more than 10,000 new items that arrive at every store each week!

Check out their twitter feed:

RETAIL LEVERAGE TAKEAWAYS:

The worst thing is to blend into the crowd of me-too’s, unless you are the market leader.  By definition, since the majority of the market in most cases is not the leader, I am continually amazed that brand marketers and retailers continually anniversary the same promos, or iterate the latest trend.  If you aren’t the leader, rarely will you ever beat the big guys at their own game.  That is why you have to change the game.  We salute you, Mr or Mrs TJ Maxx Black Friday discounted IPAD idea guy/gal, for showing everybody involved in retail how you gain Retail Leverage!

RELATED READING:

• Engadget was all over the story and got evidence early on it was true
• Fortune thinks that TJ Maxx just lost their shot at ever selling Apple products (if that matters)
• The supposed response from Steve Jobs to a consumer who emailed him directly to ask if it was true, from 9 to 5 Mac
• Opinion piece from 9 to 5 Mac with all sorts of conspiracy theories on how $399 Ipads wound up at TJMaxx and what it means to Apple

By Vincent Young

A Monster Strategy:

The strategy is nothing short of genius – find a high-demand, high dollar consumer electronic product category and profit by selling the low-cost, high-margin accessories that complement the device and make it actually work.  The key, however, is to market the accessory as “premium” because, after all, when you spend top dollar on electronic equipment, what’s a few extra dollars to get optimal performance out of the thing? That’s basically the bottled-water-like business model and marketing strategy of Monster Cable.  In 1978, Monster Cable pioneered the model by marketing so-called “high-end” speaker wire to stereo retailers.

By the early-mid 2000’s, Monster Cable had evolved beyond premium stereo speaker wire and was the undisputed market leader in the “boutique” cable market  that served as a substantial source of revenue for retailers of electronics such as DVD players, stereo systems and TVs. Since the profit margins of DVD players and TVs were relatively low, the profit margins of Monster Cable products provided supplemental revenue for these retailers. Employees of consumer electronics retailers were all trained to market and bundle Monster Cable and similar products in order to boost retailer profitability. Monster Cable was everywhere!

And then, it happened. The so-called retail “partners” of Monster Cable realized two very important things: 1. Greed is good. There simply was too much profit associated with boutique cables to allow Monster to have it all; and 2. The retailer actually owned and controlled the most important part of Monster’s business success – the retailer sales associate who convinced inexperienced, naive video and audiophiles like me that spending top dollar on these cables was absolutely necessary.  Soon, Monster Cable was basically undercut by their retail partners and replaced by lower-priced private label offerings and the store employees were incentivized to push their own house brands.

Do It To Me One More Time:

So what did Monster do? They learned that simply representing a hefty source of profit for a retailer is not enough to have any type of leverage against the retailer who is predisposed to want to take a cut of profits under a house brand – the key for Monster to continue its business model was to continue to sell high-margin accessories for growing hardware categories, but to do it by building a “call brand” that was so strong that it would be nearly impossible for a retail store associate to switch the consumer over to a lesser-known private label.

By the late 2000’s, portable music players (MP3s, IPODS, etc) represented a large and growing category of consumer electronics. Therefore, the complimentary headphone market was exploding! Players such as Bose, SkullCandy, Koss, Sony, Altec Lansing, and JVC were all competing in the headphone space and driving prices down in a battle for market share. Monster entered the market and completely changed the category experience by forming licensing partnership with hop-hop producer Dr. Dre. “Beats by Dre” were introduced as a premium headphone offering that promised that people could hear their music the way a producer hears it in the recording studio (the Monster brand name was minimized to that of a manufacturer’s credit). Because of this approach, Beats by Dre entered a price-depressed category at a $399 price-point, nearly 8x the category average (over 80% of headphone skus at bestbuy.com are under $100 with most itemized as “under $50”). Based on the success of Beats by Dre, Monster extended its very successful  headphone offering earlier this year by introducing line extensions via partnerships with record producer Sean “P-Diddy” Combs (Diddy Beats) and recording artist Lady Gaga (Heartbeats by Lady Gaga).

Today, Monster is back to being everywhere and now they have substantial leverage against the retailers who nearly “private labeled” Monster out of business just a few years ago. Each of Monster’s product lines are supported by numerous displays inside each Best Buy store. Monster has recently expanded its portable audio product offering by also introducing a line of amateur DJ equipment under the Beats franchise.  In a large number of Best Buy stores, there is now a dedicated area called “Club Beats” which serves as the Monster-exclusive showcase for the latest recording artists, DJs and products that support the live entertainment experience (now that’s retail leverage)!

Key Takeaway:

As brand marketers, the moral of the Monster Cable story is simple – if a retailer can switch your consumer (and profit stream) to a house brand alternative, they will! The only defense is to build (or borrow) a national brand that is simply “unswitchable.”

Editor’s Note:

This case also proves the power of marketing – how else can you explain people shedding their small modernistic “earbud” style headphones for 1970’s huge style headphones like Beats By Dr Dre?  In other news, look out for the next trend in LCD TV’s – the cabinet style.

This article appears courtesy of The Shelf Potato Blog, by Doug Garnett. The article was originally published on July 1, 2010, by Ben Smith.

“From half baked spud to dud in 2 months is no way to go through a life-cycle son.”

Article: “Death of the Microsoft Kin: A Look at the Evidence”

Article: “Microsoft’s Kin smartphone: No, it kin’t”

If you saw the commercials or talked to a rep in store, you probably couldn’t figure out what problems Kin solved or unmet needs it satisfied. The fact that it was pulled from the market so soon by a company with so deep of pockets leaves only a few conclusions and bigger questions.

How bad were sales – did anybody buy it?

Did Microsoft launch something it knew was bad but needed the flop to validate something? Was it a really expensive live focus group?

Article: “Microsoft Kin Gets a Price Cut…Already”

I always have a problem with companies willingness to make price moves once it is too late. Just 2 days ago the phones prices were effectively cut in half. Why not launch at those price points or heck it’s a mobile phone – why not free. At least they might have gained momentum out of the gate and gotten enough in peoples hands to see if it has legs.

What can we learn from Kin?

Don’t launch it if it is flawed.

Know your level of commitment going in. What are you willing to do if your product doesn’t get off to a good start. A powerhouse like MSFT can pull a stunt like this and still get the buyers to return their call. The rest of us don’t have that luxury.

Communicate what you do that is unique or you do better than anybody else – understand and share whatever your value is. I still have no idea what Kin does that you can’t do with an iPhone, droid, or whatever that motoblur feature is. They had an 8 figure budget to tell their story with and still failed.

Fight where you can win. They weren’t going to out apple apple on tv ads – and other players such as htc are running ads that are pretty clear with their value prop. How did anybody at msft or their agency convince themselves that their story would work. Beyond iPhone I am willing to bet the majority of phone choices occur in-aisle. If MSFT truly believed in the product they should have paid to staff demos 40 hours / week in the verizon stores / best buy.

Above all – be realistic.

If you liked this article be sure to check out Doug Garnett’s Shelf Potato Blog.  You can follow Doug on twitter @drtvguru, and of course at www.theshelfpotato.com

By Ben Smith

I wanted to provide an update to Vince Young’s prior coverage of Stainmaster carpet’s move to Lowe’s and share an article by Chris Burritt that just appeared in Business Week detailing how the dust has settled.

“Martha Stewart can thank a move by Invista’s Stainmaster unit for her good fortune. Stainmaster had been a major Home Depot carpet brand since 1996. Invista recently dumped the leading home improvement retailer to boost its sales through No. 2-ranked Lowe’s and a string of smaller distributors. Home Depot managers figure Stainmaster was under pressure by its independent carpet dealers, who had trouble competing with the big box retailer’s low prices. “We were selling a lot of carpet at very good prices,” says Gordon Erickson, Home Depot’s senior vice-president for decor. “We were a bit surprised.”

The net is that Martha Stewart now has the featured brand of carpet at the #1 carpet retailer in the US, Home Depot.

Retail Leverage Notes:

In today’s environment it is rare that a brand drops a major retailer. Once the shock wears off, you can see how major moves by competitors, particularly exclusive deals, can create retail leverage opportunities.

The void left by Stainmaster at Home Depot created the opportunity that Martha Stewart (via Shaw Industries) capitalized on. As the old quote goes, “Luck is what happens when preparation meets opportunity.” I’m guessing that both Home Depot, Shaw, and maybe even MSO had thought about this possibility before, although Home Depot was obviously shocked by Stainmaster’s move.

One has to wonder how much better business terms Stainmaster got from Lowes to move there. In addition, Stainmaster must expect to gain a greater share of Lowes carpet business than they had at Home Depot, the #1 carpet retailer.

I expect the case was they offered tangible growth to Lowes, who was eager to steal Stainmaster away from their rival in their own bid for leverage. In turn Lowes is probably doing everything short of guaranteeing a certain percentage of their business. This can be done via shelf space and ad features. That combined with more favorable terms and you can see why Stainmaster would take the leap.

What will be interesting is if the Martha Stewart brand does extend well to carpet at Home Depot. While Stainmaster must be considered more of a “sure thing” in carpet, one could argue there may be upside for Home Depot and Martha Stewart. For now, it is just one more extension of the Martha Stewart brand at Home Depot.

Related Reading:

• http://www.businessweek.com/magazine/content/10_29/b4187020881895.htm
• http://www.bloomberg.com/news/2010-07-01/home-depot-adds-martha-stewart-carpeting-as-stainmaster-pulls-out-of-chain.html
• http://retailleverage.com/2010/03/01/lowes-stainmaster/

By Ben Smith

Retail leverage comes in many forms.  In its purest form, it may be attainable only by those brands in a position to dictate terms to their customers.  For many brands it can be as simple as decreasing their reliance on existing customers.  I demonstrated this concept of decreasing reliance on existing customers in an article I recently wrote about “Blue Ocean” retail strategies, which highlighted the pursuit of alternative channels as a way to gain Retail Leverage.

I offered my own definition for “Alternative Channels,” which is means of distribution outside of those you’d traditionally expect for a given product / service to reach customers.  I provided examples of Alternative Channel successes such as Nintendo Wii Fit in Sports Authority, or OfficeMax branded office supplies in Safeway grocery stores. Pursuing alternative channel opportunities might be difficult and cause extra work, but I doubt they cause any brand marketers move out of their comfort zone, or to lose sleep at night over risking the perception of their brands by the company they keep.

This article explores pushing the boundaries of your own retail comfort level and looking at channels that aren’t necessary alternative, because they are already selling products from your category.  I’ve got 2 great examples of retailers in this story – and as the title suggests – they might hold the key to big dollar and lots of leverage in general!

HOW FAR ARE YOU WILLING TO GO TO FIND THE ANSWER?

Signing up for extra work and the challenge of going where others haven’t gone before is one thing.  Good for you if you take the challenge on.  Can I suggest another strategy that involves going somewhere that is in plain sight but that you’ve probably avoided going before?  The answer is right in front of you.

Let’s face it – in the current environment more power has shifted to retailers, in part due to consolidation, but also due to the big names pursuing and/or expanding private label in their stores.  At the same time, these same conditions have allowed other retailers to raise their profile by improving the  company they keep.  These retailers have been welcoming bigger brands with open arms – brands that in some cases that would have looked at those retailers as last resort options in the past.   Two prime examples of retailers in plain sight that can help you gain Retail Leverage are hidden in the title of this article: Dollar General and Big Lots!

BIG LOTS!

Big Lots! has done a great job of positioning themselves as the top of mind outlet that manufacturers must turn to if they “accidentally” make too much of their own goods.  Breaking news – just like the merchandise sold at outlet mall stores, what they sell isn’t always there by accident.  The proud results of your treasure hunt are likely just some marketing / sales executive’s channel strategy.  So even though you and I know the truth, but let’s not spoil the consumers fun.  Nothing illustrates the message they are sending consumers better than this 2008 Big Lots! tv commercial I’m sure you will recall seeing:

RECESSION & RECOVERY MEAN BEST OF BOTH WORLDS FOR BIG LOTS!

It’s not hard to imagine how the recession can help retailers with a value/discount positioning.  However this recent article in the Wall Street Journal illustrates why a recovery isn’t the end of the boom for Big Lots!:

“While the recession has played right into Big Lots’ business model of helping manufacturers clear their warehouses of discounted and overproduced goods, Cooper said a strong economy is also an inducement for consumers to come through its doors.  ”A better economy means better [product] availability,” Cooper said. “Manufacturers are more prone to change,” to get new goods out to consumers, and Big Lots benefits by getting more merchandise.  At the same time, Big Lots is well positioned because it carries mostly discretionary merchandise and consumers are going to remain cautious even as economic conditions get better, Cooper said. “There has been a shift towards value and we believe that shift is permanent.”

DOLLAR GENERAL:

One reason that retailers like Dollar General fly under the radar (beyond the fact they are often in “flyover country”) is that few sales and marketing executives have probably been in the store, let alone shop there.  I’m sure Walmart was that way for many of us back in the 80’s or even 90’s for some.  But Dollar General – that is one of those stores where the poor rural people shop right?  Can I say that – were we considered poor and rural in Sturgis, Kentucky (pop 2,030)?

Today it is increasingly hard to argue with any retailer that continues to chug through the recession, posting sales gains.  In their own words, here is how Dollar General describes itself on their website: “With more than 8,800 stores in 35 states, Dollar General has more retail locations than any retailer in America. In addition to high quality private brands, Dollar General sells products from America’s most-trusted manufacturers such as Procter & Gamble, Kimberly-Clark, Unilever, Kellogg’s, General Mills, Nabisco, Hanes, PepsiCo and Coca-Cola.”

In many ways Dollar General feels like a cousin of Walmart, in a Hot Tub Time Machine sort of way.  Go back 15-20 years, and take a retailer that is delivering strong results with discount positioning.  Start polishing the assortment by increasingly adding name brands, and as more manufacturers look for growth the brands keep getting better.  Seemingly overnight (again, 15-20 years), the retailer’s brand has improved in part due to the company it keeps.  So maybe it is a little early to put Dollar General on equal footing with Walmart in terms of perceived brand and  a place where people are willing to shop – but the current recession sure hasn’t hurt that.

RETAIL LEVERAGE TAKEAWAYS:

I could have easily written this article about other similar retailers in sectors that don’t have the same appeal that the mainstream players have.  Dollar General and Big Lots simply served a purpose to illustrate the idea that you can gain Retail Leverage by showing a willingness to do what others aren’t willing to do, or go where others aren’t willing to go. Of course this article assumes that you will find a business model that works for retailers beyond where your current distribution is today.  Once you take a walk down those “strange” aisles, upon closer inspection, you’ll often find that one of your competitors has already figured out a way to make it work

The current recession has shown a shift (or expansion) in how and where consumers shop – with potentially long term impact.  Aptly put by Mike Duff of BNET, “Scarred by the Great Recession and embracing frugality, the new consumer is different from the one retailers knew and loved way back in, oh, 2006.” Consumers have re-examined their shopping strategies.  Don’t immediately write off retailers because you’ve never sold there or it failed in the past.  I encourage you to take another look at where you COULD be selling today.

RELATED READING / RESOURCES:

• “Discounter Big Lots Expects Boon From Economy’s Recovery“
• “Portrait of the New Consumer: Smart and Scared”
• “Dollar General Looks For Big Growth This Year”
• “Dollar General Flexing Its Discount Muscle”

By Ben Smith

I never pass up a good analogy to help myself understand a complicated story, and spice up a boring one. The growing use of private brands (or private label) by retailers has become the key story of this new era in retail marketing. There are so many different stories and perspectives floating around, I think what gets lost in the buzz is the underlying reason of why retailers have turned to private brands. So what does retailer’s private brand strategy have to do with the NFL?  On the eve of the NFL draft, I will help you look at retailer’s private brand strategy from a new & more fun perspective.

LOOK AT AMERICA’S GAME:

In hindsight, the NFL probably truly became America’s game somewhere between the baseball strike (‘94) and the rise of online fantasy football leagues (‘99-01). Now of course the Superbowl has long been the dominant tv event, but as we all know, a large number of people tune in just for the commercials and the experience. Regardless of how it got there, the NFL rose to the top of american sports (and culture), and eventually found itself in a position that anybody who gets to the top of their field struggles with – staying #1, and continuing to grow.

WHAT FUELED THE NFL’S GROWTH?  TV!

In the spirit of Michael Scott of “The Office”, I’ll quote Wikipedia – because if it is on Wikipedia it has to be true (and in this case it is): “The television rights to broadcast National Football League (NFL) games are the most lucrative and expensive rights of any American sport. It was television that brought Professional Football into prominence in the modern era of technology. Since then, NFL broadcasts have become among the most-watched programs on American television, and the fortunes of entire networks have rested on owning NFL broadcasting rights.”

WARNING – RETAIL PARALLEL COMING:  Think about how the NFL’s relationship with its TV networks has similarities to Retailers relationships with the branded manufacturers whose goods they sell in their stores. Don’t get hung up on who makes & who sells – just stay with me here. Without the TV networks, or without the branded goods, neither the NFL or retailers would be in their positions of power – each needs the other. Would the NFL be where it is today without the TV networks? Would Walmart have gotten where they are today without finally breaking through the public’s perception that Walmart carried the same quality branded goods as other retailers?

FOLLOW THE MONEY / DRIVEN BY GROWTH:

Like anyone else who makes it to the top of their field, being #1 is not enough.  Staying #1 is the challenge, and growth is the fuel that you need to do it.  While I am sure the NFL was grateful for the various networks role in their success, they started thinking in the spirit of what have you done for me lately?  In 2003 the NFL, in a dramatic step, launched the NFL Network, in effect the NFL’s own private brand.  In one fell swoop, albeit over the last 7 years, the NFL Network has delivered growth to an already large pie, provided additional control and influence over their product, and increased their leverage for future broadcast contracts.  Here are some examples:

Increased The Value of Their Own Product

• Turned the NFL draft from an afterthought to an event, and starting this year, a prime time event, adding Thursday night and Friday night.
• Creating something out of nothing by turning the NFL schedule release into an event.
• Turned the season kickoff into a big Thursday event on NFL Network.
• Flexible scheduling – more control over late season schedule also means they can deliver better games for NFL Network late season games.
• Raised the stakes in the pre-game show arms race on all networks by securing top talent for their own pre-game coverage.
• Ultimately turned the NFL into a 24/7/365 story.  The other sports have 1 season.   The NFL is year-round.

Expanded Distribution / Grew An Already Large Pie:

• Added Thursday night football on NFL Network , now up to 8 games starting in early November.
• Added a thanksgiving day game on NFL Network.
• Expanded preseason games coverage.
• Made NFL Network a must-have offering from cable providers, which they in turn have to pay NFL for
• Created the NFL Redzone channel – an additional premium offering on game days, powered by content from the NFL / NFL Network

There is no denying the NFL Network has had a huge impact on fueling additional growth and success for the NFL.  Obviously the NFL has total control over their product, but imagine if retailers can scratch the surface of what the NFL has done with the NFL Network – you can see why retailers are pursuing private brands with such vigor.

RETAIL LEVERAGE TAKEAWAYS:

A key principle that Retail Leverage advocates brand marketers understand that it is about the retailer’s fight, and not your own; the brands that win will be the ones who can offer the retailer financial growth, not a mere redistribution of the same amount dollars. The key reasons that retailers are increasingly leveraging private brands is that brands didn’t satisfy the retailer’s need for financial growth, and they got hung up on their own fights. So the retailers decided to take control.

The NFL apparently concluded that the opportunity for additional financial growth via the existing networks was not enough.  The NFL saw opportunities to increase the distribution of their product, and improve the quality of their offering.  The NFL Network has achieved both of those goals and continues to do so. At the same time, I believe the other networks have raised their game since the NFL Network came into existence.  Thanks to the rising popularity of the NFL, fueled by TV, it is a WIN-WIN-WIN-WIN;  for the NFL, for the original networks, for the cable/satellite providers, and for consumers/fans of the NFL.  I thank you; my wife – not so much.

When I look at how the NFL used the NFL Network to gain leverage, I have a greater appreciation for how retailers are using private brand strategy to improve their own fortunes.  If anything, it should make brand marketers work harder at providing value (and growth) to retailers – and the brands who get it have an opportunity to gain Retail Leverage in their own right.  And perhaps the greatest point – the next time my wife complains about how much football I watch, I can just tell her I’m studying retail strategy!

Related Reading / Resources:

• Christopher Durham’s “My Private Brand” Blog – great resource for what retailers are doing with private brand
• Vincent Young’s previous article for Retail Leverage on licensing to gain control
• Wikipedia: NFL Network
• Wikipedia: NFL on TV

By Ben Smith

WATCH & LEARN – HOME DEPOT DECLARES BLACK FRIDAY IN APRIL:

The fight for Retail Leverage doesn’t end with brands duking it out in the aisles.   Retailers take it outside, fighting their own battles.  If you think unemployment, the real estate market, and tight credit has hurt sales for your brand, imagine how that rolls up to create a desperate environment for the retailer.  While the home improvement sector in retail is still fragmented, the two resounding leaders are Home Depot and Lowes.

Home Depot, in a bid for some Retail Leverage of its own, and in an effort to drive year over year sales growth, has declared “Black Friday Is Back”, creating their own retail big event.  Craig Menear, executive vice president of merchandising for Home Depot, was quoted in BusinessWeek saying that Home Depot will increase its marketing through newspaper circulars, online promotions and other advertising to draw consumers during its busiest season.

HOME DEPOT MANUFACTURES ITS OWN SUCCESS AND GAINS RETAIL LEVERAGE:

Home Depot is following the retail leverage playbook, creating their own “Can’t Ignore” / “Too Big To Ignore” event.  I love what Home Depot is doing, and it would still be a great idea even if it wasn’t during their peak season.  To start a fire you need oxygen and sometimes when everybody else is screaming “fire” it sucks all they oxygen out of the room.  What might get lost in November may have a better chance of standing out during other times of the year.  While timing isn’t the motivating factor, it does work out well if there is stronger seasonality at play, and that is definitely the case here.

HOW CAN YOU “DO IT YOURSELF?” (apologies for the Home Improvement channel puns)

Don’t get hung up on the fact that it was a retailer doing this, and not just a brand.  As I mentioned before, everybody looks for opportunities to gain leverage against their competition – retailers are the same.  And the same goes for scale –  it’s all relative to the pond you are swimming in, and there are levers that any brand marketer can pull to make your own “Too Big To Ignore” event.  I’ll provide a list of basic “tools” we recommend (I’m on a roll with the puns today)

List of Tools To Build Your Own “Too Big To Ignore” Event:

1. Promotion: it all starts with a strong promotion that will maximize participation among your retail partners (something they don’t want to be left out from)
2. Circular Ads: align circular ads across all your retailer partners for one week / period (again, they don’t want to be left out of this one)
3. FSI / gift guide: these dedicated pieces allow you to fully tell your story, and create a multiplier effect in conjunction with your circular presence.
4. Traditional Broadcast Media (tv/radio – if it makes sense given your $ scale)
5. Demo/sampling events (if it makes sense given your product)

The list is by no means exhaustive – depending on your capabilities and resources there are other arrows you can pull from your quiver.  Some brands have a strong social media presence & connection with their customers.  By all means – give your connections marching orders to visit participating retailers during your event.  If PR is a major component of your strategy, please do engage with those wizards who have mastered making something “look bigger than it really is”.  The net is – align as many resources as you can to amplify your message, create your own big bang and stand out from the crowd (wow 3 buzz phrases in a row).  If you succeed your only problem will be figuring out how you “Do It Yourself – Again!”

RETAIL LEVERAGE CONCEPT(S) COVERED:

• Have Something So Big “They” Can’t Ignore
• Retailers don’t care about your brand’s battles – they only care about their own

RELATED RESOURCES / ADDITIONAL READING:

• Retailwire discussion about FSI’s growing popularity (with comments from Retail Leverage on how you can leverage them)
• BusinessWeek article covering Home Depot’s “Black Friday Is Back” promotion, including executive quotes